TPR Exit Interview of Cecilia Estolano, CRA/LA CEO

This November you announced that you were leaving CRA/LA after serving as CEO since May 2006. Your new position is with Green For All. Share with TPR readers what you believe your CRA legacy will be and the challenges ahead for CRA/LA.

We have re-framed the mission of this agency, moving away from blight elimination and building shopping centers to creating economic opportunity and transforming the lives of the people who live in our project areas. We also set clear goals. We instituted performance metrics that improved the productivity of this agency 200 percent during my tenure. We can tell what we do well more accurately-where our investments create more measurable community benefits for our neighborhood. We have a broader perspective on transformative economic development; we have highlighted the importance of economic development, not just redevelopment. That's an important distinction. We have positioned CRA/LA as the leading economic development agency for the city of Los Angeles. But it's a very tough time; we need an economic development agency more than ever. It's a fragile space to occupy because of the state trying to steal everybody's money in local government.

What is the CRA/LA's transition process; who takes charge on December 1?

Cal Hollis, right now the Deputy Chief of Operations for Real Estate and a leader in financial analysis for cities up and down the state, has been nominated as the interim CEO. He is going to go to the HCED Committee before Thanksgiving, so hopefully it will be a speedy confirmation. The board and the Mayor's Office will be doing a national search for a replacement. CRA/LA is in great hands.

The state budget crisis, as you referenced in your earlier comments, has taken a toll on redevelopment agencies statewide and especially L.A. Please elaborate on the impacts to CRA/LA's mission and plans.

The state has already taken $100 million, which is being challenged in court. The state has another $21 billion deficit to fill, and I expect that they will attempt to take redevelopment funds again. The city is facing a $95 million budget deficit in the current year, and next year it's close to a billion dollars. It's a very serious financial situation, and it's almost irresistible for the state and local government to look at redevelopment agencies as a way to fill that gap.

We've done some budget projections, and we project that, apart from these raids on redevelopment funds, the amount of new tax increment coming into the CRA/LA is going to be reduced around 40-50 percent over the next three years. That's a big blow to absorb at the same that the state and local government are looking to fill budget gaps.

Referencing your earlier comments about how you've changed CRA/LA's mission to economic development from redevelopment, how has/will the budget exactions impact the work of the CRA/LA in the future, given that the recession requires serious attention to job creation and retention?

That's the point: it's about jobs. It's not just about building shopping centers for the sake of shopping centers; it's about investing in the businesses and the sectors that are going to create the jobs that rebuild this city's middle class. Even in times with lean resources, the CRA/LA can play a critical role in retaining and attracting the businesses that will lead us out of the recession. It's the business in clean tech, in bio-med, in the entertainment industry, and a number of other sectors.

Manufacturing, broadly speaking, is going to be the critical sector to get us out of this recession and put us on a more sustainable economic footing in this city. That's why it was so important that Gail Goldberg worked so hard to preserve our scarce industrial land so that there can be a place for these businesses to grow and thrive. That's how we rebuild the middle class, not just by building shopping centers. Shopping centers are important, sales tax is important, but the problem is the upside-down public finance system we have here in California and in places like in South L.A., where there just simply aren't enough retail opportunities.

From a citywide perspective we have to pay attention to manufacturing, growth sectors, and small business. For a fraction of the amount of money we spend on subsidizing some type of commercial development, we can provide important support for the businesses that will power us out of this recession-for as little as a $25,000 grant for a low interest or no interest loan for a manufacturer to retain jobs and help position them to grow and add workers. That's going to cost the fraction of the amount that it would cost to help develop a new retail development that will need financing in the next few years anyway. It's about being realistic about what we can do and how to best use our scarce resources at this terrible time for the city.

A centerpiece of the clean and greentech job creating cluster that the Mayor of Los Angeles and CRA/LA have been promoting revolved around the now defunct contract between AnsaldoBreda and Metro. What will be the city's new game plan for the cleantech corridor?

Without question, the failure of AnsaldoBreda to seal their deal with Metro was a huge blow. However, the cleantech corridor and the concept to make Los Angeles the cleantech manufacturing center of the nation was not premised on a single company to seal the deal. We still have the 20-acre site, which is one of the most attractive pre-entitled pieces of property available. We still have the focus of filling it with cleantech end users. Our staff is already pursuing some alternative anchor tenants in the cleantech sectors, but it's too early to call them negotiations. I'm very hopeful that the team will be able to attract a good mix of tenants.

That's just one 20-acre site. The cleantech corridor is going to be a location of innovation centers and an incubator for cleantech. That along with some of the infrastructure investment, rezoning, and building and safety changes, and planning efforts that our staff has been assessing as part of the cleantech action plan are going to make this a much more attractive place to invest.

The work the CRA/LA has done to launch the Los Angeles River Revitalization Corporation is also going to be an important factor in making the cleantech corridor attractive. We need open space. We need to create a new model of a revitalized river alongside cleantech innovation campuses, start ups, and venture capital firm. We all have to work together as a team. We have a comprehensive action plan that focuses on all of those elements and a staff that is highly motivated.

What political challenges arise when a city, regional, or state official advances an economic development agenda?

It's a major challenge. This is not a region that ever really thought of economic development in a comprehensive way. This is a region that equates economic development with real estate development. We don't think comprehensively about the assets that we have been given-how we build on them and how we nurture them.

Second are all of the inter-agency, jurisdictional challenges posed. One example is high-speed rail coming to Downtown LA. It's a very exciting opportunity, but some view it with some trepidation. How will it affect the plans for the L.A. River? How will it affect the plans for the cleantech corridor? How do we make sure that when we have this wonderful investment coming through Downtown L.A. it doesn't destroy the very communities we hope it will benefit? We must deal with inter-jurisdictional challenges.

Third, deal with our fundamentally broken finance system in California. If we do not address that in this crisis over the next couple years, the sheen on the Golden State may be permanently gone. I say this as a native Californian who loves this state and has three kids who were born here. We have to take advantage of this crisis to make sure we rebuild the financial system into something that's rational and encourages the right type of growth and investment.

What's the present capacity of the city of Los Angeles and the metropolitan area to envision and implement economic development? What needs to be in place organizationally to provide the vision and leadership to do the work? Where should responsibility be located-the CRA/LA or another agency?

The city needs an economic development agency, but I don't know that the city will ever have one. It is difficult to combine agencies and deal with competing interests and submissions for funding sources. If this were an academic exercise I would say, first we need an economic development agency that has a broad mission-pretty much the mission that we set forth in the CRA/LA strategic plan. It focuses on sectors and small business and housing of all types; it talks about infrastructure investment-a much broader sense of what it takes to rebuild the city and region's economy.

Two, you have to have consensus on a countywide basis. A lot of the work that the LAEDC is doing around economic development is very important. They are trying to lead the way for the county, and that's very important. There needs to be some place where those efforts can be coordinated. We don't have that in this region, and it's a big challenge.

In the last interview you did with TPR you mentioned that CRA/LA had taken leadership regarding transit-oriented development. Is this still a CRA/LA priority?

It's still very important. We're going to have the Surface Transportation Act re-authorized in Congress over the next year or two. The proportion of funding that goes to highways versus transit is going to shift more towards transit. We already see unprecedented interest and collaboration between HUD, U.S. DOT, and other agencies like U.S. EPA and the Department of Energy to promote transit-oriented development and more compact development. The city of L.A., and the CRA/LA in particular, are very welcome to this because this is something we've been working on for years now. We're well positioned to use whatever planning dollars may come down from the feds to promote the notion of compact urban development as one of the answers to dealing with climate change. AB 32 and SB 375 and all the successor implementation measures that are going to come out of that effort will again create openings for dense development in urban areas around transit stops.

The county's investment of $40 billion through Measure R is another opening. Transportation is going to be an important source of investment in this region. We've done the planning to think about what that money could fund and how it could re-frame and reshape our entire region around a more sustainable and compact model.

Should CRA/LA still play a lead role? Absolutely. The work being done on the Crenshaw Corridor and on the Gold Line extension on the Eastside are two examples of advanced planning. When the real estate development economy comes back, we'll be very well positioned to shape the size, the scale, and the intensity of development so that it'll have real estate development benefits and community and environmental benefits as well.

We're also still continuing to invest heavily in affordable housing, which is probably the only bright spot in the residential development market right now. We need to find a way to site affordable housing within transit-oriented development. That's going to be an important contributor to reshaping the commuting patterns and culture of the city where we have more mix of incomes living together. We won't have to have the kind of economic polarization and segregation that we currently suffer from in Los Angeles.

Los Angeles Developer Geoff Palmer recently won a court case that invalidated affordable housing requirements in the Central City West Specific Plan. What is the significance for development of affordable housing of this court decision?

It's significant because everybody felt like L.A. was on the verge of finally having an Inclusionary Zoning Ordinance, although we're calling it Mixed Income Ordinance now. Over 100 cities have this type of ordinance; this is not rocket science; this is nothing new. The Palmer decision stopped those efforts, not just in the city, but statewide.

Some believe we need to have some clarification about whether the ruling really was intended to put a halt to inclusionary zoning proposals. It's going to take a resolution of the Legislature on this matter. Until that happens, it really has stopped these efforts in their tracks.

We can still try to create financial incentives for developers to include a mix of income in their projects. But having that regulatory authority was very important. Even in the midst of this recession, there is still an affordable housing shortage in California. That regulatory authority was an important tool in our toolbox.

Lastly, your post CRA/LA career stop will be with Green For All. Tell us about this leadership opportunity and your role with Green For All.

It's a great opportunity and a wonderful chance to work with cities across the country to create models and programs where investment in the greening of the economy and energy efficiency translates into good paying jobs and career opportunities for poor people and people of color. It's an organization that's only been around for two years but is already a knowledge expert in designing new programs and advocating for them in cities across the country.

It has tremendous access to the administration, a great deal of authority throughout the country, and is continually asked to weigh in on things like the climate bill. I was in Washington with them just this past week-they were asked to appear at a hearing of the Senate's Hispanic Task Force on what the climate bill can mean for Latinos and Latino career opportunities. And there is Green For All sitting at the table with Sierra Club and the leading conservationists. They are authoritative experts on the new economy.

Green For All is well positioned in this unique moment in time, where we can do it the right way to make sure that the transformation of our economy actually results in a more equitable economy. If you set it up right we can make sure that people who don't have access right now to good paying jobs and good paying careers can get into the training programs and the apprenticeship programs that will lead them to successful middle class careers. It is very important that we do this, and we get those policies and that approach done now, while the table is being set. Our economy is moving toward a more efficient, environmentally sustainable economy. It's not a foregone conclusion that the benefits of those assessments will accrue to the people that need it the most. You have to be intentional; you have to be strategic and bold to transform the underpinnings of an inequitable society.

I'm going to help Green For All across the country, city by city by city, to utilize economic stimulus funds, federal funds, and other funds to implement organization programs, energy efficiency programs, and incorporate job training and career apprenticeship programs for poor folks. I am going to help them on a $20 million fund that is going to leverage $200 million that will finance the up front investment for these energy efficiency improvements.

I'm also going to help Green For All figure out the next wave. A lot of the focus has been on moving to an alternative energy future. There are also models needed for we're going to need to do on water, transportation investment, and also provide opportunities to insure that investment has a multiplier effect for communities that need it the most. I am going to open an L.A. office, will be working across the country on these efforts, to help achieve key growth, sustain it, and take advantage of this moment in history to make sure that we maximize the opportunities for the communities that we're working for.